The Financial Conduct Authority (FCA) new regulation of consumer credit starts on 1st April 2014.
CAS have been advocating with strong CAB evidence for the need for better regulation of payday and other high-cost short-term lenders. Thanks to the detailed and invaluable evidence supplied by CAB through social policy feedback, engagement with the money advice team and the debt advisersgroup the new rules are the strongest ever felt by the industry.
In addition the FCA have announced after intense lobbying that firms will be investigated from day one of their new powers. The FCA have the power to see all information and data companies hold, interview staff in firms and take immediate action if any companies are openly flaunting the rules set out.
The FCA will also produce a list of lenders who have failed to get permission to operate after the 1st of April. It will no longer be sufficient for a lender to operate on a consumer credit license alone and they must have ‘interim permission’ from the FCA by the 1st April. We have been informed that any lender who does not have this permission and continues business is operating illegally, any contracts become unenforceable and they should be reported to the FCA.
CAS are also helping shape the work the FCA is carrying out under the instruction of the UK Government regarding setting a cap on the total cost of credit on payday and other short-term lending. The details are still being developed but we know it will not simply be a cap on APR or headline interest rate but will also include fees and charges.